Federal Reserve and Bank of England Clash on Stablecoin Future

Senior officials from the US Federal Reserve and the Bank of England offered sharply different outlooks on the future of stablecoins during a major economic conference in Croatia, highlighting the growing divide among policymakers over the role digital assets will play in the global financial system.

Speaking at the 32nd Dubrovnik Economic Conference on Sunday, Federal Reserve Governor Christopher Waller argued that dollar-backed stablecoins could strengthen the international reach of US monetary policy as adoption expands across global markets.

Waller said countries and businesses increasingly relying on US dollar stablecoins may, in practice, become more exposed to American monetary conditions. In his view, stablecoins represent a natural evolution of payments technology rather than a systemic threat.

“I've always just looked at stablecoins as a payment instrument,” Waller said during the conference panel. “There’s nothing evil about it, nothing dangerous about it. They are just bringing competition into the payments world.”

His comments reflect a broader shift within parts of the Federal Reserve toward acknowledging stablecoins as a potentially influential component of modern finance, particularly as digital dollar usage grows outside the United States.

Bank of England Predicts Rise of Tokenized Deposits

However, Bank of England policymaker Megan Greene presented a far more skeptical outlook, suggesting that stablecoins may ultimately be overtaken by tokenized bank deposits within the next several years.

“I think tokenized deposits are probably going to take over from stablecoins,” Greene said. “Five years from now, I suspect we might wonder why we were talking about stablecoins.”

The two officials participated in a panel titled “Stablecoins and Monetary Policy” hosted by the Croatian National Bank, where the future of digital payments and central bank currencies dominated discussions.

Greene described the competition between emerging forms of digital money as “a race between the tortoise, the hare and the rhino.” In her analogy, central bank digital currencies represented the slow-moving tortoise, stablecoins the fast-moving hare, and tokenized deposits the powerful rhino she believes will eventually dominate the sector.

“We’ll probably end up with all three,” Greene said, while adding that tokenized deposits appear most likely to achieve widespread adoption over the long term.

CBDCs Remain Divisive Among Policymakers

The debate also highlighted diverging views on central bank digital currencies, or CBDCs. Waller, a longtime critic of CBDCs, argued that enthusiasm for state-backed digital currencies has cooled among global central banks. Greene disagreed, maintaining that CBDCs could still play an important role in future payment systems.

The discussion comes at a crucial moment for US crypto regulation, where lawmakers continue to debate how stablecoins should be governed under federal law.

CLARITY Act Faces Political and Industry Resistance

Progress on the Digital Asset Market Clarity Act, commonly known as the CLARITY Act, has slowed amid disagreements over stablecoin-related provisions and continued pressure from the banking sector. The legislation aims to establish a comprehensive federal framework for digital assets in the United States.

Although the bill advanced through the Senate Banking Committee on May 15, it still faces several legislative hurdles before reaching the president’s desk. Analysts warn that upcoming US midterm elections could further complicate its path to approval.

Wyoming Senator Cynthia Lummis, one of Congress’ most vocal crypto advocates, warned that regulatory delays could weaken America’s leadership position in the digital asset industry.

“America built the dollar-dominated financial system that has anchored global stability for a century,” Lummis wrote on X. “The Clarity Act ensures we build the next one. The time to act is now, before Beijing decides it will.”

Future of Stablecoins Remains Uncertain

The contrasting views from US and UK policymakers highlight the uncertainty surrounding the future architecture of digital finance.

While some officials see stablecoins as an extension of dollar influence and financial innovation, others believe newer forms of tokenized banking infrastructure may eventually render them obsolete.